Comment on Matusik

A reader comments on the Matusik post from earlier this week:

"I think the report misses some important trends, there are also quite a few factual errors.

For one, not ALL US houses mortgages are non-recourse, only a few states including California. MOST US houses mortgages are recourse. The biggest difference between the US and Australia is the commodity boom, but how long will that last?

Second, all the 0-down, interest-only mortgages are mushrooming in Australia as well. Australia also has stated-income loans which is no different from the US.

Second, he entirely misses the point of what commodity boom does to evolution of cities. If he concedes that the commodity (particularly energy) boom will go on for years, which argues for a booming property market, then it is the inner cities or places with good public transportation will benefit. However, he was presenting a sprawling suburban future that is completely impossible with oil price heading for the sky. He predicts that people will start commuting from Blue Mountains, it is just not going to happen if gas price is on the current track.

He is also completely off the mark in predicting a mild US recession. Many financial heavy weights including Warren Buffet, Jim Rogers, George Soros etc have come out to say that this is going to be the worst recession since the Great Depression, which is a euphemism of saying Great Depression Episode II.

The funniest of all is, if he thinks everything is rosy, US will recover in 2009, and Australia's commodity boom will go on forever, why will interest rate FALL in 2009? Shouldn't interest rate fall because the economy is NOT doing so well???

I can understand that Matusik is always arguing that property can only go up up up because he is sponsored by real estate developers, but this report just looks way to biased, to the extent that he cannot even get facts right."

Is Indigo embarrassed about Kelvin Grove?

In this weeks Brisbane News, there is a half page advertisement that has two apartments listed for sale. Strangely, the advertisement does not include the name of the developer or the suburb or the name of the development. It merely says "2km CBD". Internal photographs and floor plans are included, along with pricing (2 bedroom apartment for "only $559,000.")

The advertisement is for apartments in Indigo's Kelvin Grove Village Centre. See this realestate.com advertisement for the same apartment. ("And with 5.25% net rental return guarentee for 24 months, free legals and blinds, this property ticks all the boxes. Will rent unfurnished for $490 per week.")

The advertisement in the Brisbane News also puts the wrong floor plan against each apartment.

Why isn't Indigo identifying the apartment in the Brisbane News as being located in the Kelvin Grove Village Centre? Is it because this is considered to be a detriment, not a benefit?

Brisbane Empire Square Apartment Drawings

Drawings of apartments in the Brisbane Westin development at Empire Square.

Image of Council Plan for Milton

Matusik on Brisbane Property

Matusik, who is often engaged by developers to write reports that are provided to potential purchasers, states the following in a seminar given for Urban Pacific at Fernbrooke on 28 May 2008:

• one in three new apartment projects fell over in 2007. The attrition rate could be as high as 50% this year.
• the cost to provide new inner city apartments is much higher now than suburban detached housing. i.e. $575,000 for 2 bed apt (85sqm/1 car space) versus $385,000 for 3 bed house (225sqm/320 sqm allotment)
• overall today investors make up less than 30% of the market.
• 80% of detached houses are held by owner-residents as is 50% of our semi-detached product, whilst over 70% of attached product is owned by investors.
• nearly 70% of Australia’s attached dwellings is occupied by residents under 30 years of age

Brisbane Apartment Prices Still Increasing

"The RP Data/Rismark International end of month indices report released today confirmed that capital growth in the key markets of Sydney and Melbourne has flattened considerably during 2008. ...

RPData's Research Director, Tim Lawless, is confident that the supply side imbalance in the national housing market will see further property value increases over the next five years. “We expect low levels of housing supply to continue placing upwards pressure on housing prices over the long term. However in the short to medium term, demand side constraints are acting to slow the market. Most importantly, the current high inflationary environment is causing a high degree of uncertainty in the market which translates to low buyer and investor confidence. Cashed up buyers now have a large amount of leverage as a result of current market conditions especially now that properties are taking longer to sell and there are fewer buyers,” Mr Lawless said. “The best immediate opportunities can be found in Adelaide, Brisbane and Darwin, not to mention many of Queensland’s regional areas.”

Brisbane is also continuing to show solid growth in property values with overall growth of around 3 percent for houses and units during the first four months of 2008. The value gap between Brisbane and Melbourne is becoming wider as growth in the Melbourne market has slowed considerably. At the start of 2007 house values in the two cities were virtually on par, however the stronger value growth in the Brisbane market has seen Brisbane house values g g now 5 percent or $24,000 higher than Melbourne’s."

March 2008 Median Unit Price Brisbane = $344,247
April 2008 Median Unit Price Brisbane = $346,184
April year to date increase = 3.14%
April 12 month (year on year) increase = 18.12%
Days on Market April Quarter = 16 days
Yield - Brisbane apartments - March Quarter = 4.76%

See Rismark - RP Data report.

Westin to Block Casino Towers and Festival Towers views

Here is a photograph that I took today from the South side of the Brisbane River.

Brisbane City

Casino Towers is the tallest looking building, in the centre of the photo. (Casino Towers is 120 metres high). To the left of Casino Towers, you can see Festival Towers. The Casino is the old building in the foreground. Number 111 George Street is on the far right (145 metres).

Below, is a similar photo, showing the planned Westin Empire Square building. As you can see, Festival Towers will be impacted (you can't even see it in the photo below), and many apartments in that building that have river views today may not have river views when the Westin is complete. The Westin Empire Square will be 62 levels and 220 metres high. Also, a number of the "back" apartments in Casino Towers will have their views taken away by the Westin Empire Square.

Westin - Empire Square

Devine to Shadow Gardens

Devine's French Quarter project will place shadows over the Botanical Gardens. This is a concern.

This is what the Courier Mail says:

DEVELOPERS building high-rises over Brisbane's Botanic Gardens will no longer have to worry about casting a shadow under new city council laws.

Devine's $1 billion French Quarter precinct, fronting Alice, Margaret and Albert streets, which proposes two towers overshadowing the gardens, will be one of the first beneficiaries of Brisbane City Council's City Centre neighbourhood plan, whereby developers don't have to lodge shadow reports.

While the precinct's design is not yet complete, Lord Mayor Campbell Newman said he would still seek more details about the shadow impact.

"In relation to the Devine proposal, that will be an issue I'll certainly be asking (about)," Cr Newman said.

"With the Vision tower, there was a bit of a shadow issue - it was a small one - and we had to weigh up the positive nature of the development."

Cr Newman said the shadow impact of French Quarter would be put into perspective.

"That doesn't mean if there's a shadow, it won't get up," he said.

Labor, which comprised the majority of the council when the decision was made, said it was complying with the wishes of the Liberal Lord Mayor.

"This was the Lord Mayor's wish - this was ultimately a decision of his," Opposition Planning spokesman Milton Dick said. "At the time, the argument was there was significant shading already in the Botanic Gardens."

Neighbourhood Planning chairwoman Amanda Cooper said the City Centre plan had been through the council twice and was in the process of being implemented.

"It was felt that there was no longer any shadowing that could impact on the Botanic Gardens because of the buildings that actually existed," she said.

Trilogy Update

From Australian Financial Review, 28 May 2008

Mirvac will manage a 192-room hotel in APH Capital Partners' $A800 million tower development in Brisbane. The Trilogy complex at 480 Queen Street, set to be Brisbane's tallest building, will also comprise 30,000 square metres of office space and 109 apartments. It is likely that Mirvac will manage the hotel under its Quay Grand product. The news follows Westin Hotels & Resorts' commitment to manage Metroplex's Empire Square development, also in Brisbane.

Extract from the Brisbane Times:

The $880 million Trilogy Tower will include office space, residential apartments and a five-star hotel, APH Managing Director John Wilson said.

He said the 70-level, 265m-high building would be Brisbane's tallest when it is completed by the middle of 2012.

Mr Wilson said the tower would feature a large, solar-powered lamp at the very top that would be seen from all over the city.

"We've gone to great lengths to try and create something that will be instantly recognisable in Brisbane, like a lot of landmark buildings across the world," he said.

"In fact, we'd like to have Trilogy Tower associated with Australia, ultimately."

The tower will be built on a 3487 square metre site that will combine land formerly occupied by the Australia Red Cross building at 480 Queen Street, and the Dome Nightclub next door.

The nightclub will be demolished when its purchase is finalised next month.

Mr Wilson said "everything" from the concrete rubble to steel and glass from the demolition sites would be recycled.

Mr Wilson said Trilogy Tower's one- and two-bedroom apartments would go on the market "within the next two to three weeks".

Brisbane Building Heights

Trilogy (proposed) - 265 m
Vision (proposed) - 259 m
Empire Square (proposed) - 250 m
French Quarter (proposed) - 230 m ??
Aurora - 207 m
Riparian Plaza - 200 m
Skyline - 150 m
Waterfront Place - 162 m
M on Mary - 145 m
Charlotte Towers - 138 m
Festival Towers - 135 m
Felix - 131 m
Admiralty Towers Two - 126 m
Casino Towers - 120 m

French Quarter - New Two Tower Design

From today's Courier Mail

THE designer behind the famous sail-shaped Burj Al Arab luxury hotel in Dubai has won an international competition to design Devine's $1 billion French Quarter precinct in Brisbane.

The design of two towers by Tom Wright of Atkins has been selected from a field of five international architectural firms which were vying for the honour.

Atkins is also the group behind the Trump International Hotel and Tower in Dubai.

Devine managing director David Devine said yesterday now that the concept for the building had been selected planning work would start with an eye to lodging a development application in the next couple of months.

The towers will form the centrepiece of Devine's $1 billion French Quarter, a 6-star hotel and residential development.

It is to built on sites fronting Albert, Margaret and Alice streets which Devine amalgamated throughout last year. Once complete it will feature two towers housing a 6-star hotel, residential apartments, retail and commercial space.

This will all be linked by a Parisian-style cafe and walkway.

Apartments in the development will be priced from $1.5 million. Prices will reach $15 million – the most expensive apartments ever to be marketed in Brisbane.

"This project will be a true coming of age for Brisbane," Mr Devine said.

Expressions of interest for an international operator to run the hotel component of the development is down to a short list with the successful operator expected to be announced soon.

Mr Devine said none of those on the shortlist were currently operating in Brisbane.

It is also the first project by Atkins in Australia.

Mr Wright said he hoped to bring a new level of luxury and sophistication to the Brisbane skyline with the design.

Mr Wright and his team will now be commissioned to work with Devine's local design firm ML Design to develop the final plans before a development application is lodged.

It is hoped construction will start in 2009 and be finished in 2012.

Ray White Inner City Report

For the 2007 Ray White inner city apartment report, click here.

Brisbane Project Sales - First Quarter 2008

Not including M on Mary (for which no data is easily available), there were only six new apartment projects selling in the January to March 08 quarter. These were Aurora, Evolution, Pinnacle, Skyline, The Macrossan and Vision. (Empire Square and Trilogy Tower were taking expressions of interest, but no contracts were issued or signed in this quarter.)

Of these six buildings, there were only 20 reported sales in the first quarter 2008.

Aurora - 2 sold, none remaining for sale
Evolution - 3 sold, 23 available for sale
Pinnacle - 1 sold, 12 available for sale
Skyline - 2 sold, 16 available for sale
The Macrossan - 1 sold, 13 available for sale
Vision - 11 sold, more than 100 available for sale
Empire Square - about 100 available for sale
Trilogy - 192 hotel rooms and 109 Skyhomes available for sale

Totals - 20 sold, about 592 available for sale.

By way of reference, there are just under 7000 completed apartments in the Brisbane CBD. In 2007, there were 1229 apartment sales in the Brisbane CBD.

Example Rents in Brisbane City

New Buildings - Furnished

1 bed, no car - M on Mary - $500 per week
2 bed, 2 bath, 1 car - Evolution - $900 per week
2 bed, 2 bath, 1 car - Skyline - $1,300 per week
3 bed, 2 bath, 1 car - Skyline - $900 per week
3 bed, 2 bath, 3 cars - Riparian - $2200 per week

Other Buildings - Furnished

2 bed, 2 bath, 1 car - Admiralty Towers - $680 per week
2 bed, 2 bath, 1 car - Saville South Bank - $740 per week

New Buildings - Unfurnished

2 bed, 1 bath, 1 car - Evolution - $650 per week
2 bed, 2 bath, no car - Aurora - $660 per week
3 bed, 2 bath, 2 car - Skyline - $1500 per week
3 bed, 2 bath, 3 car - Riparian - $1850 per week

Other Buildings - Unfurnished

2 bed, 2 bath, 1 car - Admiralty Two - $580 per week
2 bed, 3 bath, 1 car - Metro 21 - $575 per week

Admiralty One - New Listings

Admiralty One, which in my opinion, has some of the best apartment buildings in Brisbane, has two 2 bedroom apartments for sale. The best two bedroom design in AD1 is over 130 sqm, which is 30 sqm larger than the largest 2 bedroom in Skyline. This design has a separate kitchen and separate laundry room, and is on the end of the building, so that the kitchen and bathroom have windows. Also, AD1 is direct river front, the body corporate fund and sinking fund have plenty of cash, and the building prohibits short term rentals.

Two bedrooms, for sale at $900,000

Two bedrooms, for sale at $850,000

Three bedrooms, for sale at $2,500,000

Grey Street Redevelopment

The street scape at Grey Street at South Bank will greatly improved with the proposed development of Stage Two of the Brisbane Convention Centre. The development will be over the rail line, and will front Grey Street, next to Rydges Hotel. It will improve the street when walking from the Cultural Centre and Museums along Grey Street to the Saville Hotel area.

See South Bank Newsletter.

Trilogy Tower - Going Ahead

Trilogy is a building that will have three parts - office, hotel and residents. APH tried to sell the office component and failed. See Brisbane's $300m Trilogy tower campaign fails from The Australian.

That article states:

APH managing director John Wilson said a funding package, led by the Bank of Scotland, was now in place for Trilogy and negotiations finalised with builder Laing O'Rourke.

"At no stage have we hesitated," he said.

A deal had been signed with a five-star hotel operator and would be announced soon.

Marketing would begin this month on the sale of the 192 one- and two-bedroom hotel apartments, which would range in price from $500,000 to $900,000.

The 110 residential apartments at the top of the tower would be priced between $1 million and $5million.

A start of work on the $700 million Trilogy -- which APH said would be taller than any other existing building in Brisbane -- would confirm the race had begun to deliver the city's next generation of super towers.

However, with funding difficult in the wake of the credit crisis, analysts believe many of the developments proposed for Brisbane will fail to materialise.

With timing now crucial, GPT Group has started work on its $500 million 111 Eagle Street tower nearby, and work is under way on Austcorp's $1 billion Vision tower.

APH has begun demolition on its site between Queen and Adelaide streets and expects to start construction next month.

Mr Wilson said special techniques would speed construction and allow delivery of the office space by May 2011.

"As far as we know we will be first to market, in terms of buildings that are about to start," Mr Wilson said.

Meanwhile, Metacap Developments -- a joint venture between Sydney-based Newell Palmer Securities and Brisbane developer Alex Jimenez -- has announced it will start construction in the new financial year on its $500 million Empire Square tower on Elizabeth Street. It secured a deal last year with five-star hotel operator Westin over the 306 hotel rooms and 104 branded apartments.

Empire Square will include about 23,500sqm of A-grade office space.

Meriton Tower - Back to the Drawing Board

Meriton told to resubmit plans for 'appalling' skyscraper
Georgina Robinson | May 7, 2008

Property developer Meriton has been unceremoniously told to go back to the drawing board with plans to build an "appalling-looking" 76-storey skyscraper in the Brisbane CBD.

Liberal and Labor politicians used a meeting of Brisbane City Council's urban planning committee to roundly condemn the proposed Adelaide Street tower for its potential traffic impacts and "appalling design". Lord Mayor Campbell Newman also made an unusual visit to the meeting to declare his opposition to the 403-unit project in its current form.

The proposed site is at the intersection of Adelaide and Macrossan Streets in the so-called Petrie Bight, one of Brisbane's most densely populated precincts. Its 400-plus units would be a mixture of serviced and residential apartments, set atop a podium of commercial space and 10 levels of carparking.

Central ward councillor David Hinchliffe said many locals were worried another influx of apartment dwellers would choke the tiny streets around the area, which is already home to Skyline and the Macrossan building, which is under construction. But Meriton planning manager Walter Gordon said the company had been working closely with council planners for 12 months to sort out the traffic issues.

Council planning chair Amanda Cooper said the committee was also "underwhelmed" with the tower's design. "We want to see something we're proud of, not something we're trying to disguise with other things around it," Cr Cooper said.

And Cr Newman asked his comments be noted in the meeting minutes. "We've been talking about excellence in design for years here," he said. "This does nothing, I don't see any merit in that whatsoever." A disappointed Mr Gordon said he was unaware such objections existed. "I'm a bit disappointed that having worked so closely with council and we come up to this stage to hear nobody likes it," he said. The committee instructed Meriton and council planning officers to do more work on traffic management and design.

Trilogy - New tower will ease five-star room shortage

From the Sunday Mail today:

CONSTRUCTION will begin next month on Brisbane's latest luxury hotel as the city continues to face a critical accommodation shortage.

Trilogy, which will feature 192 five-star one and two-bedroom hotel apartments in a 70-storey tower, will be the first five-star hotel built in Brisbane for a decade. A report released by Deloitte last week found Brisbane had the fourth-highest hotel occupancy rate in the world at 84.3 per cent. "It's pretty powerful, compelling evidence of the need for more hotel rooms in Brisbane," said John Wilson of APH Capital Partners, backers of the $700 million development. "There's a tremendous demand for five-star rooms in the city." Trilogy will have a massive lantern incorporated into the design, which will light up the night sky over the CBD and make it one of the city's most recognisable buildings.

"It will be an incredible landmark," he said. "Our intent was to make it something that over time will be instantly recognisable. "There are buildings around the world that people recognise and associate with particular cities and this will become one of them."

At 265m, APH is also claiming it will be Brisbane's tallest building, although it could be overtaken by Vision, a 287m residential and commercial tower planned for the city.

Trilogy will be built on the site formerly occupied by the Red Cross building at 480 Queen St. Demolition has begun and construction will start in June. It should be completed about the middle of 2012. In addition to the hotel, it will feature 109 luxury residential apartments and 28 levels of offices. The cost of building traditional luxury hotels had been prohibitive, but Trilogy will be selling the hotel apartments as strata titles to individual investors and leased back to the hotel operator – to be named later this month.

Prices for the fully furnished rooms – with views over the Brisbane River, Story Bridge and the city – will range from $500,000 to $900,000.

The Deloitte annual Hotel Occupancy Global Ranking Index, which compares 165 cities outside North America, listed Perth at No. 1. Cairns, Sydney, Melbourne and Adelaide also joined Brisbane in the Top 20.

Ray White's Inner City Unit Report

Ray White's Inner City Unit Report 2007 has the following statistics:

Brisbane CBD (downtown area only) for apartments
Year 2007:
Number of Sales - 940
Median Sale Price - $445,000
Highest Price Sale - $4,700,000
% Brisbane Change - 4.5%
506 apartments sold between $250,000 and $499,999
188 apartments sold between $500,000 and $749,999
63 apartments sold between $750,000 and $1M

Year 2006:
Number of Sales - 817
Median Sale Price - $425,000
Highest Price Sale - $3,800,000
% Brisbane Change - 8.5%
486 apartments sold between $250,000 and $499,999
168 apartments sold between $500,000 and $749,999
40 apartments sold between $750,000 and $1M

Year 2005:
Number of Sales - 1,049
Median Sale Price - $392,000
Highest Price Sale - $7,370,000
% Brisbane Change - 11.5%
542 apartments sold between $250,000 and $499,999
181 apartments sold between $500,000 and $749,999
41 apartments sold between $750,000 and $1M

Water's Edge at West End - Now Released

Pradella's Water End development (Stage 1) at West End has been released. Pricing is aggressive.

1 bedroom (Apartment Type G - 61 sqm internal). High floors will likely have river views.
Facing South/West - $475,000 to $625,000
Facing North - $495,000 to $695,000
Most of these sold out on the first day of pre-release.

2 bedrooms

Apartment Type L - 84 sqm internal
Facing North - $665,000 to $945,000
To get a river view, I think you need to pay at least $835,000 for this style apartment.
Plans below. Click on plan to enlarge. As you can see, one bedroom really has no windows.

Apartment Type C2 - 103 sqm internal
Facing North, and close to the river but not a direct river view
$1,055,000 to $1,295,000. Not all of these will have a river view.

Apartment Type D - 113 sqm internal
Facing North, and in the centre of the complex with a pool view and some higher floors will have a river view.
$1,095,000 to $1,320,000.

There are other 2 bedroom layouts, and facing different directions.

3 bedrooms

Apartment Type C1 - 115 sqm internal
3 Bedroom, 2 Bathroom (one bedroom does not have a window - see plan below)
Facing north, but not direct riverfront and some may be too low to have river views - $1,230,000 to $1,630,000

Direct riverfront 3 bedrooms - Types A1 and A2 (159 sqm internal), facing West
$1,945,000 to $2,245,000

Skyline's River Vista

This is a photo of a 2 bedroom "I type" apartment in Skyline. This apartment is 87 sqm internal, and was sold as having Brisbane River vistas. From the photo, you can see that it has a great view of Admiralty Towers. On the right, you can see the door to the second bedroom. It is a strange shaped apartment, with bad karma. The living room (seen in the photo) is not wide enough, and the dining area is a triangle shaped alcove. The kitchen faces a blank wall.

Brisbane Median House Price Growth

The following are reported Brisbane median house price growth rates, reported by various data providers:

March 08 Quarter

ABS: 2.8%
RP Data: 2.1%
Residex: 3.8%
APM: 2%

April 07 to March 08

ABS: 20.8%
RP Data: 17.3%
Residex: 21.2%
APM: 18.4%

Devine's Cathedral Place Apartments "Unliveable"

See Brisbane Times Article

Matusik Comments on Brisbane Property

From the Brisbane Times:

http://www.brisbanetimes.com.au/articles/2008/05/08/1210131140302.html

• While Mr Matusik predicts prices will not increase by more than eight per cent this year, he believes the key ingredients for continued growth remain strong.

• "Some commentators are claiming that the residential property market has come to a 'screaming halt', but there still remains some price growth."

• "In the short-term buyers are keeping their power dry following the interest rate rises over the last six months... but out recent survey work shows investors are starting to stir."

• With rents climbing at double-digit rates, Mr Matusik believes investors will return to the market during the course of the year.

• He predicts property prices in Brisbane will grow by 25 per cent in the next three years if interest rates remain steady and economic conditions improve.

Empire Square Article

Extracts from the Brisbane Times:

http://www.brisbanetimes.com.au/articles/2008/05/09/1210131233926.html

• Construction will begin later this year on a 65-storey residential, commercial and hotel high-rise on Elizabeth Street that is set to dominate Brisbane's skyline.

• The tower will comprise 306 luxury hotel suites, 98 two and three-bedroom apartments and six penthouses.

• A recreational area will be located on level 30 of the building and feature a luxury day spa, 20m indoor swimming pool, sauna and gym.

• Metacap director James Chopard said permanent residents would have access to services like gourmet chef-prepared room service, housekeeping, a concierge and valet parking.

• Designed by architecture firm Cottee Parker, the soaring green skyscraper will dwarf neighbouring buildings and sit across from the car park entrance to the Myer Centre.

• Colliers International has been appointed as marketing agents for the development and two-bedroom apartments will be priced from $1.3 million.

• Construction is expected to start at the end of the year and completion is scheduled for 2012.

See: Press Release

See video

Will Flow be Impacted by Waters Edge?

Flow, at West End, was developed by Pradella. Next door, Pradella is developing Waters Edge. It looks from this photo that Waters Edge will crowd out Flow and impact its views.

Photos of Brisbane

Google runs an interest photos website, Picasa, that has many interesting photos of Brisbane, including apartment buildings. Some are fantastic. Here are my favourites:

http://picasaweb.google.com/maruglenn/LessonsFromBrisbane

http://picasaweb.google.com/ronstuff17/CityPics

http://picasaweb.google.com/gscottie/Brisbane07

http://picasaweb.google.com/LaurieDryburgh/BrisbaneQueenslandAustraliaMarch2007Photos

http://picasaweb.google.com/kraustin/AroundBrisbane

http://picasaweb.google.com/jwknuth/DowntownBrisbaneAustralia

http://picasaweb.google.com/ehsan.ketabi/BrisbaneAustralia

http://picasaweb.google.com/tbraisby/BrisbaneToday

http://picasaweb.google.com/wandering.outdoors/Brisbane

Riparian
http://picasaweb.google.com/fbatch/RiparianPlaza

http://picasaweb.google.com/wwwinno/BrisbaneCitycatCruise

Evolution
http://picasaweb.google.com/tbraisby/EvolutionPhotoS

Ciana
http://picasaweb.google.com/tbraisby/CianaApartments12thOctober

http://picasaweb.google.com/tbraisby/CianaApartments10thOctober

The Establishment
http://picasaweb.google.com/tbraisby/TheEstablishment

Brisbane Trends

According to Australian Property Monitors:

"Decline of 2 per cent in apartment prices was observed in Brisbane, which may indicate softening investor demand."

“The party is definitely over for property investors, at least for now. Sydney, Brisbane and Canberra apartment markets have all experienced declines in value over the March quarter.”

Brisbane Apartments: March 08: $324,457; December 07: $331,302 March 07: $295,286

It is unclear to me from this report, actual what these figures measure. For example, if there are more forced sales of "Devine" investor apartments, by investors who overpaid and who are struggling with mortgage repayments, and other investors and owners are holding on to quality stock, will this impact the above statistics. Are these numbers really "like for like" comparisons.

Full report at: http://www.homepriceguide.com.au/media_release/APM_HousePriceSeries_MarchQ08.pdf

RP Data reports in its Property Pulse today:

"In Australia’s largest market, Sydney, houses and units are averaging between 44 and 49 days to sell. At the other end of the spectrum, Brisbane properties are averaging around a month to sell the average home."

"The RP Data/Rismark International end of month Property Value Indices Report now indicates that while the Australian property market has softened, it remains steady with national values increasing by 1.46 per cent over the three months to March ’08, an annualised return of around 6 per cent.

Despite interest rate rises and inflation fears, this is quite a good result and demonstrates the good risk/return characteristics of diversification in an Australian residential property portfolio.

When compared to the share market, this return seems all the more positive. As an example, during the March quarter the ASX200 and All Ordinaries dropped 15.5 per cent and 15.8 per cent respectively.

Based on the RP Data – Rismark findings, the only capital cities to record a fall in property values were Perth and Canberra where dwelling values declined by 1.0 per cent and 0.6 per cent respectively over the quarter. Despite the fall, Perth units hold the most expensive median value of any capital city at $464,000."

"Brisbane recorded growth of around 20 per cent with most regions delivering returns of 15-20 per cent over the year to March ’08. Inner city Brisbane stands out as the best performing region with growth of 35 per cent over the year."

"Another rise in interest rates will certainly cool the market further. The markets most affected will be the mortgage belts of Australia where mortgage stress is already at critical levels. A further rate rise could see property prices fall a further five percent in these locations. On the other hand, a constant interest rate environment would likely put a floor under many areas which have seen significant value falls. If rates remain stable over the next twelve month we would expect national dwelling values to remain in positive growth territory. "

Interesting Apartments for Sale In Brisbane

Riparian: 3 bedroom with great river views, high quality building: listed at $3,300,000

Admiralty One: 3 bedrooms on high floor, great river views, high quality building: listed at $2,500,000

River Place Villa, 3 bedrooms, listed at $2,100,000

River Place, 3 bedrooms, listed at $2,000,000

Admiralty Two, 3 bedrooms, high quality building listed at $1,300,000

River Place, 2 bedrooms, renovated with new kitchen: listed at $900,000

River Place, 2 bedrooms: listed at $690,000

Quay West: large 1 bedroom over looking the Botanical Gardens, high quality building: listed at $550,000

All the above have "never to be built out" views.

Also, Aurora: 2 bedrooms, corner, high floor, but may be impacted by Trilogy: listed at $749,000

I will be interested to see what these apartments actually sell for.

Water's Edge at West End - Release Date

According to an email from Colliers, Waters Edge at West End will be released for sale next week:

Prices from

· 1 bedroom from $495,000

· 2 bedroom from $575,000

· Large 2 bedroom from $815,000

· 3 bedroom from $1,085,000

· Large 3 bedroom from $1,945,000

Car parking

1 & 2 bedroom - one space
Large 2 bedroom, 3 bedroom - two spaces

Settlement - 2010

The Residences at The Westin

The Empire Square "The Residences at The Westin" website has gone live.

www.empiresquare.com.au

AFR - RP Data Brisbane Apartment Survey 2007

Building	Number of Resales	Median Annualised Capital Growth	Median hold period
Riparian Plaza	4	24.8%	2.8 years
Grosvenor	7	11.9%	3.7 years
Admiralty Towers	10	9%	6 years
KoKo	15	7.6%	2.3 years
Quay West	13	6.1%	11.1 years
Festival Towers	61	2.3%	3.9 years
Charlotte Towers	13	0.8%	2.9 years

Capital Growth is only for apartments that were sold in 2007. The median hold period includes time held from original off-the-plan contract date to sale.

Auction - Ray White Spectacular

Auction - 20 April 2008

112 properties listed for sale, including 26 vacant lots on Russell Island and 6 rural properties.
10 out of 80 residentials sold prior to auction
18 out of 70 sold at auction
21 sold within a week after auction.

According to Ray White, the day proved a good "educational process. .. Buyers are more discerning. ... some vendors are not yet in tune with the slight change in the market."

There were about 10 apartments that went to auction, including one in Skyline and some in Aurora and Festival.

Not so gloomy?

A recent Australian Financial Review article (16 April 2008) has the headline - "Gloom on house prices may be misplaced."

"In Australia, the long-term trend is very much the reverse [of the United States] - not enough housing stock to meet strong underlying demand for housing. This is the trend in both the home purchase and the home rental markets. In the short term, buyers are keeping their powder dry, following aggressive interest rate rises of the past six months. But this temporary stalling will do nothing to deflect the pent-up demand for Australian residential property that has been building over recent years - or the chronic under supply of housing stock that has developed since 2000. ... That said, there is a growing view that interest rates in Australia have now peaked. If this is right, the next leg up in residential property could come sooner than you think."

Market Comments

From the recent RP Data Property Pulse:

For those property owners who are considering selling, it would be a good idea to hold off if possible. There are a lot of properties listed for sale and fewer buyers in the market. Those buyers that are willing and able to purchase now have the luxury of time on their side, which means more negotiation, higher levels of discounting and longer selling times. Selling a property now is likely to result in a less than optimum sale price.

On the flip side, the time to buy may be ripe. We can expect the savvy investor to be on the prowl and owner occupiers who have their finances in order may also be stepping up to the plate. Times like these can be rich pickings for knowledgeable buyers who have the financial clout not to be deterred by further rate rises. These buyers will be making low offers and will be largely inflexible in their negotiations. The primary target will be properties that have been up for sale for more than two months or distressed sales.

Forced sales are likely to show a further increase during 2008. Those mortgage holders who have been holding out for a rate fall will be bitterly disappointed. Instead, they will be looking at steady or rising rates most likely into the next year. Many will be unable to withstand the sustained financial pressures.

Recent Sales Website

The Ray White - Chris Hinds website has recent apartment sales in Brisbane.

Examples:

Casino Towers, Apt 2301, 2 bed, 2 bath, 2 car = $660,000
Aurora, Apt 289, 2 bed, 1 bath, 1 car = $425,000

Also, building information.

How to Find a Great Apartment to Rent in Brisbane

** Updated post click here **

It is becoming harder to find a good apartment to rent in Brisbane. Not only are rents increasing, but there are few new buildings opening over the next few years and a number of existing buildings are being turned into short stay "hotels".

Good apartments are often snapped up quickly. Also, onsite managers control the majority of apartments for rent in most buildings, and don't often advertise on the usual property websites (as they don't need to do so). Some have their own website. Onsite managers may have a relationship with executive relocation services that are given preference.

You have to find out how each manager advertises his/her vacancy.

If you are looking for a place to rent a good inner city apartment, I believe that this is one of the better sites to look at: http://www.seqrents.com.au

This website has a list of most city apartment buildings, with useful information and links about them. Also, try this customized search engine.

You want to avoid any buildings that are primarily short stay buildings (unless of course you want to stay for 2 nights to 2 months.) So avoid buildings managed by Oaks, as they focus on short term hotel style rentals. Look here if you want a short stay apartment in Brisbane.

There are some cross-over buildings, that are officially hotels but that have apartments on higher floors. Usually, the apartments in these buildings have the option of receiving hotel services. Two examples are Quay West and Saville South Bank, which are good places to live.

Look around -- the rents for some of the newer buildings are much higher, and the apartments are smaller, than in buildings that are five to ten years old.

Some places to look:

In the downtown area:

Admiralty One, is good value: http://www.seqrents.com.au/admiralty/

Admiralty Quays and Admiralty Two are also good quality. At present, I think some of the best value apartments for rent are in Admiralty Two.

Admiralty One (also called Admiralty Towers), Admiralty Two and Admiralty Quays were all developed by the same developer and are direct river front, an easy walk to the downtown. They all have one or more swimming pools.

Next door to Admiralty Quays on the river in the city is River Place , that is clearly not as good quality (it is a Devine built building), but is likely to have availability as this is a large complex. Careful of Storey Bridge noise. Great views. Recently taken over by Mint Apartments, which is doing short stay and hotel rentals.

For an inner city downtown building, Metro 21 is one of the better quality buildings. It has only 4 apartments per floor -- and tries to be more upmarket so is better than most buildings that aim at students -- it seems to have better availability, and some of the two bedroom apartments have three bathrooms. It does not do short stay. The balconies are large: http://www.realestate.com.au/realestate/agent/metro+21+brisbane/mlibri
and http://www.metro21apartments.com.au/

On Alice Street in the city, if you can get an apartment in Quay West, that is fantastic, as it has park and river views. Half of this building is a hotel managed by Mirvac. All apartments are privately owned. You want to get above level 7.

It is also worth trying some of the off-site agents:

• Harcourt
• Ray White CBD
• Ray White Projects
• Blocksidge
  

In my opinion, some of the buildings to avoid (see prior posts) are

• 212 Margaret
• Festival Towers
• Charlotte Towers
  
• Aurora
• River City
• Felix
• Casino Towers
  

In SouthBank:

I recommend Arbour on Grey at SouthBank: http://arbour.com.au/cms/welcome.html

Also, Saville at SouthBank is one of the nicest buildings if you get a river facing apartment: http://www.seqrents.com.au/saville/index.htm

I know people at LeftBank at West End who like living there, but it is a little bit far to walk to any shops -- it is in an industrial area: http://www.seqrents.com.au/leftbank/

In the suburbs:

In the back of Toowong, Encore is a relatively nice complex, with good pricing (but currently construction next door, so take care of which apartment). http://www.seqrents.com.au/encore/

St Lucia is harder to find quality -- the quality is there, it is just that there are few onsite managers and it is harder work to find good available apartments.

In Indooroopilly, Riva is the only quality building -- again, some noise in some apartments due to nearby construction. Some have river views. http://www.seqrents.com.au/riva/

There are very few vacancies in quality apartments in the suburbs.

Brisbane Apartment Search Engine

Click here for a specialist search engine with information about Brisbane apartments.

Margaret Street Developments

Margaret Street has two new buildings under construction. They will impact:

• Oaks 212 Margaret
• River City Apartments
• Charlotte Towers and River Park Central
  

Meriton's Brisbane

Triguboff still a fan of Brisbane

17 Apr 2008 | The Australian Financial Review | Michelle Singer

"The Sunshine State agrees with Meriton and billionaire boss Harry Triguboff's approach to development..."

-----------------

This recent story in the AFR states that Meriton's tower on Adelaide Street in Brisbane will have 403 apartments and 200 serviced hotel suites. There will be a 10 level underground carpark. Construction will commence this year.

Meriton's second Brisbane project, the Hercshel Street building, will be up to 90 storeys.

Mirvac's Tennyson

According to the Australian Financial Review, a penthouse apartment in Mirvac's Tennyson Reach development recently sold off-the-plan for $5.25 million. It is 731 sqm. The second stage (92 apartments) is reported to be 25% sold.

Collier's Opinion of Residential Development Market in Brisbane

• Experiencing differing levels of demand for varying price segments, ie $1m - $1.5m the best, $600K - $900K poor.
• Projects with long settlements tracking the best.
• Slow sales for projects with short construction timeframes, are midway through construction or are completed.
• Supply levels are fine and should continue to reduce as a lot of proposed developments do not get off the ground.
• Fundamental property drivers other than interest rates are very good and improving however negative sentiment from bad press is severely affecting this.
• Agent incentives and price rebates / negotiation items are increasing however we see this a short term trend as the major driver of this related to June 30 reporting. Most projects have achieved good sales over the past 24 months and as such are in strong positions. Extended negative reporting and sentiment could however increase these past this date.
• Development site market has softened with supply levels increasing dramatically in the last two months. However buyers are taken a “sit and watch” approach.

See report from 2008 Residential Market Summit (March 30 & April 1, 2008)
http://www.affordablehome.com.au/files/pdf/Colliers-International-Advanced-Residential-Marketing.pdf

also, see ANZ's report - Housing Supply Shortfall, from the same Summit.

Evolution Reviews

The Evolution Apartment building at North Quay in Brisbane is now complete and people have moved in.

Unfortunately, it is being run as a short term and holiday "hotel". You can book at wotif.com and stay the night. Or you can spend more than $2 million and buy the penthouse and share your facilities with overnight visitors.

I visited last week, and these are my opinions.

General:

The views from some of the apartments are magnificent, especially from the higher floors and those looking down the river in the South Eastern direction.

The quality of finishes is generally good. Ducted air-conditioning, good kitchens, floor-to-ceiling tiles in bathrooms, plenty of cupboard space in most apartments, good security, nice windows and sliding doors.

Two elevators, both spacious.

I didn't like the car parking -- the driveways were too narrow.

The pool area on level 6 is relatively nice. A big outdoor space, with bbq and good light. An indoor kitchen nearby. Also, a TV room. The gym was very small. When I visited, the pool area (but not the pool itself) was getting a lot of use. A large group having a bbq and another in the TV room.

One feature that the developer highlighted in advertising was the communal sky lounge on level 36. It has a quality kitchen and pool table, plus small TV and lounge area. It is not a large area overall. But, if you wish to use it, you have to pay a $200 fee to the on site manager!

I did not like the noise from the South East Freeway, which could be heard in all apartments that have river views. It is one of the busiest roads in Brisbane, and is directly below the building (between the building and the river). This is a major drawback. Some apartments had double sliding doors, which cut down the noise when closed. Sitting on the balcony was very noisy.

Type A Apartment Two bed, two bath. (84 sqm internal, plus two balconies, with total space of 102 sqm)

Overall, this apartment had a good feel. It seemed larger than 84 sqm internal. The main balcony was a good size - it looks one direction along the South Bank river reach and the other direction along the Coronation Drive river reach.

The apartment has a westerly aspect, which is a negative. The living room / dining room is, however, small. One couch was pushed up against the kitchen bench, and the dining table pushed up against the wall.

There is a large entry and hallway, that includes a good study desk.

The bedrooms are relatively separated. The main bedroom is a good size with a large ensuite. However, it looks west. The second bedroom gets little light, as its aspect is blocked by the main bedroom.

Warning: On most floors, this apartment is blocked by the office building next door -- which is right up along side. This has a major negative impact on the second bedroom, and a negative aspect on the main bedroom. The second bedroom in the apartment that I saw had very minimal natural light and no view at all.

Type B Apartment Two bed, two bath (76 sqm internal and 10 sqm external - total of 86 sqm)

Not a large apartment, and about 5 sqm is hallway. Small kitchen. Small balcony. Bedrooms on each side of living room, and directly off living room (so less privacy). This apartment had a cramped feeling. So small that there was no room for a bath -- two showers but no bath. The views were good, South East down the South Bank river reach. It is best to be above level 15 or so, otherwise the Federal Court on the other side of the road may impact views, but not dramatically. Main bedroom was a good size with good views from large windows. Overall, too tiny.

B type apartment on 11th floor, 115, for sale at $760,000. This is way too expensive in my opinion for this apartment.

Type C Apartment Two bed, one bath (64 sqm internally plus 13 sqm balcony = total of 77 sqm)

There are two types of C type apartments, next door to each other. One is the mirror image of the other.

Surprisingly, I liked this apartment the best.

It is very small. There is no ensuite. There is a shower but no bath. The main bedroom is behind the 2nd bedroom and so has a small window and little light.

However, as soon as you walk in, you see the view. It looks South East down the South Bank river reach. It is a surprisingly good view from higher floors. However, you must be above level 15 or so, otherwise the Federal Court on the other side of the road will impact views dramatically. The balcony is a good shape and size. Not impacted by the Western sun.

Keep in mind that as the office building under construction at 402 George Street grows, these apartments will loose a lot of their city views. But this will not impact the river aspect.

C type apartment on 18th floor, 183, for sale at $650,000.

Type D Apartment One bed, one bath (53 sqm internal and 9 balcony - 62 sqm total)

Very small. Has Western aspect. No river views. Views mostly of Roma Street railway goods yards. No carpark included. Views will be impacted by proposed Meriton Tower on Herschel Street and office building being constructed on George Street. Kitchen is just a wall of cupboards. This apartment has no redeeming features at all.

D type apartment on 11th floor, 111, for sale at $414,000

There are a number of "sub-penthouse apartments" for sale as well. For example, apartment 344 on level 33 is a 2 floor apartment, 2 bedrooms upstairs and living kitchen downstairs. 144 sqm in total, so it is a good size, with a good aspect. However, the balcony is glassed in, so has a strange feeling. But the price -- $1,700,000 for a 2 bedroom apartment !!!

More details on the "sub-penthouse" apartments here.

Overall, this building has some nice apartments and some horrid apartments. It is ok for a short stay, for example, if you had to live here for 3 months. But I would not want to live any longer. The apartments with the good layouts and aspects are too small, and the larger apartments on higher floors are too too expensive. Many apartments have negatives -- too small, western aspect, built up against another building or poor layout. Over time, I suspect that this building will not live up to its promises and will become a place for students or short term stays only. I will avoid Evolution.

Prior posts on Evolution are here.

Skyline Falls

Skyline apartment, which is supposedly an exclusive residential building, is doing short tern and vacation rentals.

See Check-in.com.au or wotif.com

Not very good if you spend a million dollars on your apartment and you have the football team staying next door.

And for "hotel" guests, take care. This is not a hotel. The "reception" is open limited hours. Don't try to check in at reception Saturday afternoon or Sunday, and don't try to speak with anyone in management after hours either if something goes wrong in your apartment.